


Goblins and Galleons: The True Explanation for the Wizarding World’s Goblin Wars

by RDavidson (inklesspen)



Category: Harry Potter - J. K. Rowling
Genre: Cross-Posted on Tumblr, Essays, Meta, Worldbuilding
Language: English
Status: Completed
Published: 2015-08-15
Updated: 2015-08-15
Packaged: 2019-07-18 08:45:19
Rating: General Audiences
Warnings: No Archive Warnings Apply
Chapters: 1
Words: 1,079
Publisher: archiveofourown.org
Story URL: https://archiveofourown.org/works/16114913
Author URL: https://archiveofourown.org/users/inklesspen/pseuds/RDavidson
Summary: An essay on Wizarding economic history, originally published on Tumblr.





	Goblins and Galleons: The True Explanation for the Wizarding World’s Goblin Wars

JKR’s Wizarding World has a very strange currency by modern standards. The Galleon is allegedly made of gold, but it’s worth only five British pounds, according to [a 2001 interview](http://www.accio-quote.org/articles/2001/0301-comicrelief-staff.htm). On that day in 2001, the price of one [troy ounce](https://en.wikipedia.org/wiki/Troy_weight) of gold was 185.338 British pounds. (A troy ounce, which is the measurement used for precious metals, differs from the normal (avoirdupois) ounce measurement. 12 troy ounces make up one troy pound, and 1 troy oz is about equal to 31.1 grams.)

Harry’s Triwizard winnings, if converted into British pounds and then used to buy gold on the (muggle) open market, would buy him about 26.97 troy ounces, or approximately 1.85 normal pounds of gold. Since gold is very dense, this wouldn’t take up much space; it’s about 85% of the volume of a standard egg. A single galleon (5 GBP) would buy enough gold to make a coin with about 1/8th the volume of a US dime, hardly a usable coin. Clearly galleons can’t be solid gold — at least not without presenting an enormous incentive for any wizard with more greed than scruples to go into business selling gold on the muggle markets.

But is there any gold in them at all? Galleons are made by the goblins (Order of the Phoenix, chapter 19); that is, by the (apparently central) bank, not by the government. There is a very similar institution in the muggle world; from 1694 to 1946, the [privately-owned Bank of England](https://en.wikipedia.org/wiki/Bank_of_England#History) had the exclusive right to print British banknotes. What these notes represented was (and still is) debt; the shareholders of the Bank had loaned the government 1.2 million pounds, and a pound banknote was quite literally the King’s promise to pay back one of those pounds. Suppose a galleon coin contains no gold at all; instead, it represents the Ministry’s promise to pay a galleon’s worth of gold. This also explains why Gringotts could use security measures that made the galleon coins multiply endlessly; the coins themselves are a mere accounting token and the goblins have complete control over them. (On the other hand, gold was widely considered to be the perfect, incorruptible metal, which is why the Philosopher’s stone gives both gold and eternal life.)

So how did this state of affairs come about? It’s interesting to note that the the first goblin rebellion mentioned in the books was in 1612, while the Statute of Secrecy was finally agreed to in 1692. Societies being what they are, the wizarding world must have gradually been separating itself from muggle society for decades before the Statute was finally enacted. More goblin wars followed in the 1700s. It seems likely these events were related.

In the real world, the 1500s and 1600s were a time in which massive treasure fleets carried stolen gold and silver from America back to Europe. Unfortunately for your average European, the gold and silver didn’t stay there. From 1550 to 1645, [China imported 7325 metric tons of silver](https://www.jstor.org/stable/2123972), around of a third of which had come from America. The gold likewise headed off east, because Europe wanted to buy things from India and China, but made nothing India and China wanted. The result was that your average British subject didn’t actually have any gold or silver, beyond what was necessary to pay taxes. (Because coins had to be made of valuable metal, the moment the coin’s metal content was worth more than the face value of the coin, it would be melted down and thus removed from circulation. Even if that didn’t happen, people would still [shave some valuable metal off the edges](https://en.wikipedia.org/wiki/Methods_of_coin_debasement) — a crime, but a very common one. And of course precious metal was constantly leaving the country.)

Since your average muggle didn’t have much in the way of coins, he or she transacted much of the day to day business by running up a tab; periodically the village would get together and balance out the books and the final amounts owed would be paid up, possibly by providing goods equal to the price owed. However, being in debt was also becoming increasingly criminalized (no doubt due to the incredible demand for precious metal). We read of [one court case in Chelsea](https://www.jstor.org/stable/3679239) where a woman bought some cloth on credit, paying a 20% down-payment and putting up security for the rest. However, the merchant soon changed his mind and successfully had her tried and hanged for theft (in that she had not fully paid for the cloth before making clothes out of it). This is certainly an extreme case, but you may imagine that many people went to great lengths to obtain the coin necessary to pay their taxes.

Another factor is that the communal credit was generally available only to people who were in the community. Those outside the community (such as travelers, beggars, or, presumably, wizards) also had to pay cash. Combine these two facts, and it makes sense that your average wizard would have a need for money (as in, gold and silver). Sooner or later, he would turn his eyes to the goblin banks.

I submit that the earliest goblin “rebellions” were actually prompted by indebted wizards attempting to do to the goblins what their muggle counterparts had done to the Americans; obtain gold and silver by whatever means are necessary. History shows example after example of indebted people becoming willing to do horrible things to satisfy their creditors (just as the creditors were willing to tolerate horrible things being done, so long as they got their money). As the Statute of Secrecy came into effect and wizards had to work entirely within their own economy, there must have been some truly horrific atrocities visited on the goblins (who after all are not even permitted to carry wands).

Eventually a settlement must have been reached between the Ministry and the goblins, likely involving Ministry payments going through Gringotts bank and the establishment of a debt to back Gringotts coinage. This capitulation would have been deeply embarrassing for the Ministry; no wonder the official history refers to goblin rebellions. In this, like in so many other official Ministry stances, the facts are few and far between.

(My primary source for the paragraphs dealing with real-world events is David Graeber’s excellent Debt: The First 5000 Years, which is available [on the Internet Archive](https://archive.org/details/Debt-The_First_5000_Years). I’ve provided links to some of Graeber’s sources if you happen to have a JSTOR account, though.)

**Author's Note:**

> [Original link](https://inklesspen.tumblr.com/post/127281055564/goblins-and-galleons-the-true-explanation-for-the)


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